Goldman Sachs joins the Center for Climate-Aligned Finance
Following the launch of Rocky Mountain Institute (RMI) Center for Climate-Aligned Finance, Goldman Sachs has announced its participation in collaboration with Wells Fargo, Bank of America and JPMorgan Chase.
“Our work with the Center will play a pivotal role in our work assisting clients in their transition to a low-carbon economy. We are especially excited about the partnerships that the Center is forging with industry leaders across sectors and are looking forward to engaging with our peers to further the momentum on a just climate transition,” commented John Goldstein, head of the Sustainable Finance Group at Goldman Sachs.
The center’s mission is to serve as an ‘engine room’ for the financial sector, facilitating partnerships with corporate clients to establish practical solutions to transition the global economy to net zero emissions by mid century alongside the industry, civil society and policymakers.
RMI highlights that the financial sector has an important role to play in the global sustainability agenda in order to drive climate aligned solutions. These solutions have a growing focus on implementing the Paris Agreement in real economy sectors. In addition the Center for Climate-Aligned Finance - which will be independently administered by RMI - will collaborate with the financial sector to develop integrated solutions and decision-useful frameworks to drive decarbonisation, as well as relevant metrics, tools and means for tracking progress.
“Climate alignment is cementing itself as the gold standard for the financial sector, but we need to acknowledge the difficulty of putting the global economy on track to net zero on an urgent timeline. The Center will shape how ambitious commitments can be effectively translated into lasting impact,” commented Paul Bodnar, chair of the Center for Climate-Aligned Finance and managing director at Rocky Mountain Institute.
“While climate alignment of the financial sector, as an approach, holds promise as a durable, holistic framework that will have a tangible impact on the real economy, implementing the idea in practice will be challenging and require collaboration among the financial sector, its corporate clients and policymakers,” noted in a company statement.
“Wells Fargo is committed to taking a leadership role in accelerating a just transition to a low carbon economy by working together with multiple stakeholders—most importantly our customers—to advance sustainable business opportunities,” commented Perry Pelos, SEVP and CEO of Commercial Banking at Wells Fargo. “Our commitment to The Center is timely in that it will provide a platform for the financial sector to align on approaches and methodologies to increase our impact, support our customers and communities as they innovate and adapt, and collectively drive toward a low-carbon economy and future.”
Karen Fang, managing director and global head of Sustainable Finance at Bank of America, added that “addressing the global challenge of climate change will take the public, private and nonprofit sectors working together to find scalable and sustainable solutions.” Noting that “the Center’s climate alignment initiative is a critical step forward to better understand climate-related issues and risks, as well as opportunities to mobilize capital needed for the transition to a low-carbon economy.”
Marisa Buchanan, head of Sustainability for JPMorgan Chase also expressed that “climate change is a critical challenge of our time. JPMorgan Chase supports the goals of the Paris Climate Agreement and the need for market-based policy measures to significantly reduce carbon emissions. The ability to make the goals of Paris a reality requires a deep understanding of the opportunities, as well as the barriers that many industries still face. We are excited to support RMI’s Center for Climate-Aligned Finance in its efforts to work together with the financial sector and a diverse range of industries to develop thoughtful and pragmatic solutions that accelerate a lower-carbon transition.”
Harnessing its 40 years experience in developing market based solutions in order to accelerate the energy transition the center will help develop practical and scalable solutions to accelerate the transition towards a more sustainable energy platform and economy.
RMI’s CEO, Jules Kortenhorst concluded that “when the history of the energy transition is written, the financial sector could be seen as one of the most important drivers of transformative change—but only if we work quickly and boldly in the coming years to resolve the practical barriers to climate-aligned finance. We invite other financial institutions to join us on the journey.”
Six issues at the top of tax and finance leaders’ agenda
New Deloitte research reveals that tax leaders are under increasing pressure to add strategic value as companies accelerate business model transformation, from undergoing digital transformations to rethinking their supply chains or investing in green initiatives.
According to Phil Mills, Deloitte Global Tax & Legal Leader, to “truly deliver value to the business, the tax function needs to rethink its resourcing model and transform its technology infrastructure to create capacity and control costs”.
And the good news, according to Mills, is that tax and business leaders have more options at their disposal to achieve this.
Reflecting the insights of global tax and finance executives at global companies, Deloitte’s Tax Operations in Focus study reveals the six issues at the top of tax and finance leaders’ agenda.
Trend 1: Businesses seek more strategic counsel from tax
Companies are being pushed to develop new digital products and distribution channels and accelerate sustainable transformation and this is taking them into uncharted tax territory. Tax leaders say their teams must have the resources and skills to give deeper advisory support on digital business models (65%), supply chain restructuring (49%) and sustainability (48%) over the next two years. This means redrawing the boundaries of what tax professionals focus on, and accelerating adoption of advanced technologies and lower-cost resourcing models to meet compliance requirements and free up time.
According to Joanne Walker, Group Tax Director, BT Group PLC, "There’s still a heavy compliance load today, but the vision for the future would be that much of that falls away, and tax people become subject matter experts who help program the machine, ensure quality control, and redirect their time to advisory activity.”
Trend 2: Tipping point for resourcing models
Business partnering demands in the tax department are on the rise, but 93% of tax leaders say their department’s budget is remaining flat or falling. To ensure that the tax function can redefine itself as a strategic function at the pace that is required, leaders are choosing to move increasing amounts of compliance and reporting to a combination of shared service centers, finance departments, and outsourcing providers that have invested in best-in-class technology.
Trend 3: Digital tax administration is moving faster than expected
in addition to the rising focus of the corporate tax department partnering with their business counterparts, transformative changes to the way companies share tax information with revenue authorities is also creating an imperative to modernize operations at a faster pace. Nine in 10 (92%) respondents say that shifting revenue authority demands on digital tax administration will have a moderate or high impact on tax operations and resources over the next five years—and several heads of tax said the trend is moving faster than expected.
"It’s really stepped up in the last couple of years," says Anna Elphick, VP Tax, Unilever. "Tax authorities don't just want a faster turnaround for compliance but access into a company’s systems. It's not unreasonable to think that in a much shorter time than we expect, compliance will be about companies reviewing a return that's been drafted by the tax authorities."
Trend 4: Data simplification and lower-cost resourcing are top priorities
Tax leaders said that simplifying data management (53%) and moving to lower-cost resourcing models (51%) must be prioritized if tax is to become more proactive at delivering strategic insights to the business. Many tax teams are ensuring that they have a seat at the table as ERP systems are overhauled, which is paying dividends: 56% of those that have introduced NextGen ERP systems are now highly effective at supporting the business with scenario-modeling insights. Only 35% of those with moderate to low use of NextGen ERP systems said the same.
At Stryker, “we automated the source P&L process for transfer pricing which took a huge burden off of the divisions," says David Furgason, Vice President Tax. "Then we created a transfer price database to deposit and retrieve data so we have limited impact on the divisions. We are moving to a single ERP platform which will help us make take the next step with robotics.”
Trend 5: Skillsets are shifting
Embedding a new data infrastructure and redesigning processes are critical for the future tax vision. Tax leaders are aligned — data skills (45%) and technology process experience (43%) are ‘must have’ skills in a tax department of the future, but more traditional tax specialist knowledge also remains key (40%). The trick to success will be in tax leaders facilitating the way these professionals, with their different backgrounds, can work together collectively to unlock lasting value.
Take Infineon Technologies, which formed a VAT technology and governance group "that has the right knowledge about how to change the system to ensure it generates the right reports", according to Matthias Schubert, Global Head of Tax. "Involving them early was key as we took a greenfield approach, so we could think about what the optimal processes would look like and how more intelligent systems could make an impact
Trend 6: 2020 brought productivity improvements
Improved productivity (50%) and accelerating shifts to remote working (48%) were cited as the biggest operational benefits to emerge from COVID-19-driven disruption. But, as 78% of leaders now plan to embed either hybrid or fully remote models in the tax function long term, 34% say maintaining productivity benefits is a top concern. And, as leaders think about building their talent pipeline and strengthening advisory skill sets, 47% say they must prioritize new approaches to talent recognition and career development over the next two years, while 36% say new processes for involving tax in business strategy decisions must be established.